Correlation Between Centene Corp and Cencora

Can any of the company-specific risk be diversified away by investing in both Centene Corp and Cencora at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Centene Corp and Cencora into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centene Corp and Cencora, you can compare the effects of market volatilities on Centene Corp and Cencora and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Centene Corp with a short position of Cencora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and Cencora.

Diversification Opportunities for Centene Corp and Cencora

-0.7

Correlation Coefficient

Centene Corp  Cencora

Excellent diversification

The 3 months correlation between Centene and Cencora is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora and Centene Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Centene Corp are associated (or correlated) with Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Centene Corp i.e., Centene Corp and Cencora go up and down completely randomly.

Pair Corralation between Centene Corp and Cencora

Considering the 90-day investment horizon Centene Corp is expected to generate 1.61 times more return on investment than Cencora. However, Centene Corp is 1.61 times more volatile than Cencora. It trades about -0.07 of its potential returns per unit of risk. Cencora is currently generating about -0.28 per unit of risk. If you would invest  5,860  in Centene Corp on September 13, 2024 and sell it today you would lose (170.00) from holding Centene Corp or give up 2.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Centene Corp  vs.  Cencora

Centene Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cencora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cencora has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cencora is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Centene Corp and Cencora

The main advantage of trading using opposite Centene Corp and Cencora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp position performs unexpectedly, Cencora can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cencora will offset losses from the drop in Cencora's long position.

The idea behind Centene Corp and Cencora pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.